Cramer’s Crazy Money Recap: Toll Brothers, Lennar
Sometimes good news is actually good news, and if you think about it too much, you’ll miss it. That was Jim Cramer’s lesson for his Mad Money viewers on Wednesday. Every day we receive another amazing economic news, only to tell us how much this is a harbinger of bad things to come.
Case in point: Today’s headlines indicate new home prices are hitting record highs, which, of course, is a bad thing.
But Cramer said he was inspired by home builder Toll Brothers (TOL) – Get a report, who noted that in the past decade America has built six million fewer homes than in the previous decade, despite a growing population. According to Toll, it is possible that the real estate boom in our country is just beginning and it will take years to break even.
Toll Brothers is not alone, rival Lennar (LEN) – Get a report told investors on his conference call that the current pace of new home construction cannot overcome the deficit we have created over the past decade.
Is it safe to fight rising house prices by raising interest rates, crushing demand and prolonging the housing shortage, while putting people out of work? Or would it not be better to give it time and allow the market to meet the demand of the 73 millennials in need of their first home?
Cramer reminded viewers that 2021 is nothing like 2006. In 2006, the Federal Reserve raised interest rates 17 times in a row in an effort to cool the housing market. This, rather than solving the real problem – loose lending standards. In today’s market, however, there are no ninja loans and no loans without documentation. In fact, banks and consumers are stronger than they have been in years.
Finally, let’s not forget COVID, which has detached millions of workers from their desks and allowed them to work across the country and in areas like Boise, Idaho and Austin, Texas. Once the rebalancing of the US workforce is complete, there may well be a return to normal without intervention.
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Play AppLovin to win
Investors looking for a fast growing gaming stock should take a look at the recently public AppLovin (APP) – Get a report, Cramer told viewers. In fact, this might be the best little stock you’ve never heard of.
AppLovin went public earlier this year with a bang. The company started out as a provider of software development tools, but quickly evolved into in-house game development and now has a portfolio of over 200 titles, most of which are mobile games that you can enjoy. play on the go.
Cramer said that AppLovin’s game portfolio will be impressive on its own, but the company also has a wealth of valuable data that it compiles from all of its customers, which has seen it achieve a rate of compound annual growth of 73% between 2018 and 2020. AppLovin forecasts 80%. growth in 2021.
AppLovin’s shares are trading at nine times sales, which seems expensive until you compare them to competitors like Roblox. (RBLX) – Get a report to 16 times sales and Unity Software (U) – Get a report at 24 times sales with a lower growth rate. That’s why Cramer said that AppLovin is a great company worth buying.
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Off the charts
Now that investors are warming to secular growth stocks again, is it time to buy Snap shares (BREAK) – Get a report? Cramer spoke to his colleague Tim Collins in his “Off The Charts” segment to find out.
Collins first looked at a daily chart from Snap and noted that stocks had just broken their 50-day moving average, completing a bullish inverted head-and-shoulders pattern. He also drew attention to Snap’s Stochastic Oscillator, which indicates that the stock has more room to function.
With the bullish momentum in favor, Collins recommended buying right away, giving him a price target of $ 80. It was also bullish on the weekly stock chart, which showed a bullish “W” formation which confirmed its thesis.
Executive decision: box
In his “Executive Decision” segment, Cramer spoke with Aaron Levie, co-founder and CEO of Box (BOX) – Get a report, the cloud storage company that is in an uphill battle with activist investor Starboard Value to unlock more shareholder value.
Levie said Box is executing the plan they laid out years ago, which includes increasing gross margins and accelerating their growth rate. They continue to be a disruptive content management platform that their corporate customers cannot do without, leaving a significant increase in their inventory, he said.
Starwood currently owns an 8% stake in Box and is asking for additional seats on the company’s board of directors, but Levie said Box has already added seven new members in recent years and sees no need for changes. additional.
Levie cited the recent approval of KKR (KKR) – Get a report as validation of the current plans and trajectory of his company. He said that compared to their SaaS peers, Box is performing at the level it should be.
Constellation ahead of profits
In his “No Huddle Offense” segment, Cramer said that the recovery is gaining momentum, there is one stock that is poised to thrive and that is Constellation Brands. (STZ) – Get a report. As a restaurant owner himself and one who keeps a close eye on the New York bar scene, Cramer said he can confirm that people are more than ready to hang out and drink with friends.
Constellation has $ 2.5 billion in premium spirits revenue and an additional $ 6 billion in beer and wine revenue, all of which are set to post big numbers compared to 2019. Better yet, Constellation reports next week, which means we’re going to ‘You don’t have to wait long for good things to happen.
Here is what Jim Cramer had to say about some of the actions proposed by callers during the “Mad Money Lightning Round” on Wednesday night:
First solar (FSLR) – Get a report: “I think you’re in great shape with this one. It’s progressing.”
GAN Limited (GAN) : “There are so many gambling companies. I don’t want to be in any of them.”
Everi (EVRI) – Get a report: “I would take the profits and play with the money from the house.”
Rod (STEM) : “I love Stem and what they do. I think you’re fine with Stem.”
PPG Industries (PPG) – Get a report: “At the moment, it’s not going to do as well as the faster growing stocks.”
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At the time of publication, Cramer’s Action Alerts PLUS does not have any positions in the mentioned stocks.